Sun Sentinel: South Florida banks expect to grow in 2014

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By Donna Gehrke-White
December 31, 2013

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Boca Raton-based First Southern Bank has a new location on Las Olas Boulevard in Fort Lauderdale. (Mike Stocker, Sun Sentinel / July 26, 2013)

No South Florida bank went under in 2013 and earnings reports were robust throughout the banking sector. That’s good news, and there’s more to come in 2014, with a healthier banking sector freer to lend more to both businesses and consumers.

“Things are getting better,” said Richard Brown, chief economist of the Federal Deposit Insurance Corp. that last oversaw the closing of a South Florida bank in October 2012 when Tamarac‘s First East Side Savings Bank went under.

Banks in Broward, Palm Beach and Miami-Dade counties in 2013 got a welcome gift from the real estate sector, which shot up in double-digt value early in the year.

“The real estate market turned on a dime,” he said.

That helped banks trying to unload foreclosed properties while it kept some homeowners from dropping over the edge into foreclosure, FDIC’s Brown said.

While conditions still aren’t up to pre-recession levels, South Florida banks are much healthier than they were in the dark days when the entire state led the nation in bank closings in 2010, according to Brown and FDIC spokesman David Barr.

“The banking industry has made an unbelievably quick rebound in South Florida,” said Raul Valdes-Fauli, president and CEO of South Florida-based Professional Bank. “So much so, that I fear we may have missed a few steps and might be setting ourselves up for another downturn.

“We all need to be cognizant of that.”

Still, his bank increased its “loan books 45 percent in the past 12 months,” Valdes-Fauli said. “The bank overall has grown in 2013, and we project healthy growth for next year, too.”

Many other South Florida banks have been growing. Boca Raton-based First Southern Bank, for example, expanded into downtown Fort Lauderdale’s financial district in May to cater to small businesses.

Overall, the number of bad loans continued to drop at South Florida banks, said Karen Dorway, president of the Coral Gables-based research company, Bauer Financial.

“We are very optimistic,” about an even better year ahead, she said.

Her company gave its highest award of five stars to several South Florida banks — including the largest, Miami Lakes-based BankUnited — and the newest — Broward Bank of Commerce — that opened its doors in 2009 in Fort Lauderdale. Broward Bank was the state’s No. 1 success story in lending to small businesses, with the help of federal money, according to a U.S. Treasury report published in October.

In December, BankUnited was named among the top 10 banks in the country, ranked as No. 8 by Forbes. It also was named the top-performing, publicly-owned mid-sized bank in America by Bank Director magazine.

“South Florida has really led Florida out of the recession. We expect it to get better,” Kanas said in an interview. “We see continued improvement in the South Florida market.”

Part of the bank’s expected growth will be in new accounts and giving out more loans, he said.

New commercial loans at BankUnited, including real estate loans and leases, grew to $4.5 billion in the third quarter that ended Sept. 30, jumping about 20 percent — or $762 million.

Since September, BankUnited has continued its upward lending, giving out in December, for example, a $60 million loan that will reduce costs and free up money for ongoing improvements to the Lauderdale Marine Center in Fort Lauderdale, a 50-acre boatyard and marina, one of the nation’s largest.

“We’ll grow loans probably in excess of a billion dollars over a quarter,” Kanas said. “We expect to see dramatic growth.”

South Florida’s economy should grow more in 2014 as other banks increase their lending to businesses, said South Florida banking analyst Ken Thomas.

That will help add more jobs to the area as companies get the money to expand, he said.

Regulations on commercial lending haven’t tightened as much as they have on mortgages, Thomas added. That’s more of an incentive for banks to focus on lending to small businesses, although Thomas expects them also to give out more mortgages.

Local banks should also make more profits in 2014 as the Federal Reserve raises interest rates. “We know rates are going up,” Thomas said. “That’s even better news for banks’ spreadsheets” as the banks will make more money from new loans’ higher interest payments, he said.

Still, South Florida banks aren’t at their healthiest pre-recession level, he and other analysts said. That may take another two years or so.

“The banks in South Florida are in pretty good shape but there are a handful that could use a little help,” said James Cassel, chairman and co-founder of Cassel Salpeter & Co., an independent South Florida investment banking firm.